Treasury GMAC Bailout A Fraudulent "Kiting" Scheme?

The Bush Administration seems determined to extend the US auto industry's life until January 21st come hell or high water. The latest sign of this desperation? The Treasury just bailed out GMAC with $5 billion of taxpayer TARP money that it doesn't really have.

NYT: The Treasury Department injected $5 billion into GMAC, the automobile financing company, as part of a deal announced Monday night that will let GMAC convert itself into a bank holding company to reduce its borrowing costs and thus borrow money at low rates from the Federal Reserve...

In shoring up GMAC, the Treasury resorted to using money from the Troubled Asset Relief Fund, the $700 billion rescue program for financial institutions that Congress approved in early October.

The Treasury had already allocated all the $350 billion that Congress authorized for the first half of the program. But even though the Treasury Department has not yet requested the second half of the money, officials said they could provide the financing to GMAC because they have not actually used all of the money allocated for recapitalizing banks.

Catch that? This sounds equivalent to writing $1,100 of checks on a checking account with $1,000 in it because only $900 of the checks have already been cashed. In the real world, this is called "check kiting," and it's illegal.

(Note also when the GMAC bailout was announced: After GMAC already had the money. Much harder for angry outsiders to reverse a decision like this than to stop it before it is made).

So will the Treasury now at least ask for the remaining $350 billion of the TARP to cover commitments it has already made, or will it try to pass that buck to Obama, too?